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Business is booming in the Windy City, according to a new July Chicago Business Barometer report (link opens a PDF) released today by the Institute for Supply Management. After clocking in at 51.6 for June, July's index moved slightly higher to 52.3. Unfortunately, the advance wasn't enough to appease analysts, who had expected a 54.0 reading.

The ISM creates its index from surveys of purchasing and supply chain professionals based in Chicago. An above-50 rating indicates expansion, while below 50 implies a contraction from the previous month. Although the geographic focus is limited to the Chicago area, investors keep tabs on the index as a leading indicator of U.S. economic activity.

Taking a look at the index's components, new orders, production, and employment continued to expand, but at a slower rate than in June.

Despite the lackluster improvement, there are some positive signs hidden in the latest news. Order backlogs clawed back from a record drop in June, and supplier delivery times inched back above 50 after hitting a four-year low the month before. Inventories continued to contract, reaching their lowest level since November 2009.